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Audiovox, Qualcomm Mum On FLO TV Report

10/05/2010 11:14:17 AM Eastern

New York - Audiovox declined to
comment on news reports that FLO TV will shut down its direct-to-consumer
mobile-TV service by the end of the year after a little more than a year on the
market.

FLO TV, a subsidiary of Qualcomm,
has not returned multiple phone calls and emails.

Audiovox markets three products
that receive FLO TV's direct-to-consumer service: an installed in-vehicle FLO
TV tuner to retailers, another version for car dealers, and a FLO-TV-equipped
portable DVD player. For its part, FLO TV markets a handheld battery-operated
personal TV.

It was unclear if FLO TV will
also shut down its white-label service to cellular carriers AT&T and
Verizon Wireless. Both carriers offer a version of FLO TV's subscription
service under their AT&T Mobile TV and Verizon Vcast Mobile TV brands
through about a dozen cellphones combined. The phones are equipped with FLO-TV
tuners.

Retailers have told TWICE that in
part because of the economy, sales of in-vehicle tuners have been slow, but one
also mentioned that picture quality was grainy on in-car displays larger than 7
inches in size. Sales through car dealers were also affected by the
recession-induced decline in new-car sales. In addition, research analysts have
said FLO TV's white-label service through cellular carriers has been slow to
gain traction, in part because of the small selection of FLO TV-equipped
phones.

For his part, Dr. Paul Jacobs,
CEO of FLO TV owner Qualcomm, has said the company misjudged consumer interest
in on-the-go viewing of TV episodes and other long-form programming compared to
viewing short-form video.

If the reports of a shutdown are
true, the decision caught Audiovox by surprise, given the company's
announcement last month that it was banking on a major price cut to its FLO TV
in-car TV tuner and continued advertising by FLO TV to boost the product's
sales during the holiday season. The cuts took the retail aftermarket version
of the car tuner to $199 from $399, plus installation. The price of expediter
version was also "substantially cut," the company said at the time.

By this morning, the Mobile
Electronics Specialists Association and the In Car Experts (ICE) buying group
said they have received no official word about the service's future, but ICE
said it was supposed to get an official update in the next day or two.

FLO TV's direct-to-consumer
service has been available since late 2009, initially through a FLO TV-marketed
handheld personal TV, which was promoted early this year in a Super
Bowl ad
and was most recently priced at $149 from an original $249. Also
late last year, Audiovox began marketing an Advent-branded FLO TV tuner through
expediters to new car dealers for connection to a vehicle's existing DVD video
system. Earlier this year, Audiovox shipped the Audiovox-brand in-vehicle tuner
to electronics and car stereo retailers, and Mopar began offering FLO TV as a
car-dealer-installed option in Chrysler, Jeep, Dodge and Ram vehicles.
Audiovox's $199 DVD/FLO TV portable followed in the summer in limited
distribution.

 Earlier this year at the NAB show in
April, FLO TV announced plans in the second half to add interactive
capabilities, pay-per-day and event passes, and time-shifted viewing options.
The company also talked about adding datacasting capabilities to expand the subscription base.

By July, however, Qualcomm's CEO
said at an industry conference that Qualcomm was willing to talk to potential
buyers to take over the service-provider role, although he noted that the chip
maker always expected to get out of the service-provider business after
launching it to push the technology.

The 700MHz-band service launched
through Verizon in early 2007, but service was initially available only in 20
markets where unused UHF spectrum was available. FLO TV gradually expanded
service to 65 markets by early 2009, growing that to 85 in June when analog-TV
stations turned off their analog transmitters during the terrestrial-TV
conversion to digital broadcasting. By the end of 2009, service was available
in about 107 markets reaching more than 200 million consumers. Service through
AT&T started in mid 2008.

 FLO TV offers up to 20 channels of full-length
simulcast and time-shifted programming from such content providers as ABC, ABC
Entertainment, ABC Family, ABC News, ABC Sports, Adult Swim Mobile, CNBC and ESPN.
A month-to-month direct-to-consumer FLO TV subscription costs $14.99/month
for up to 20 channels.

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